Zurich, Insurers Said to Be Questioned on Iran Sanctions

July 25 (Bloomberg) -- Zurich Insurance Group AG is among
companies being questioned by New York’s insurance regulator in
a widening investigation into compliance with a law imposing
sanctions against Iran, a person familiar with the matter said.

The state Department of Financial Services yesterday asked
insurers to explain their policies and procedures to avoid
violations of the federal Iran Freedom and Counter-Proliferation
Act of 2012, according to a letter to the companies obtained by
Bloomberg News. The act took effect July 1.

“The resulting sanctions could jeopardize the ability of
any involved insurer to conduct business in the United States,”
the department said.

The regulator, led by Superintendent Benjamin Lawsky,
contacted insurers in June about compliance with the law. They
included Swiss Reinsurance Co. and Lloyd’s of London.

Zurich Insurance shares dropped 1.2 percent to 252.10 Swiss
francs ($269) at 11:26 a.m. local time, paring this year’s gain
to about 11 percent. That values the company at 37.4 billion
francs. Swiss Re, the world’s second-biggest reinsurer based in
Zurich, declined 0.6 percent.

Compliance Policies

Besides Zurich, companies contacted through the newest
letter are American International Overseas Ltd., AXA Global
Risks, and St. Paul Reinsurance Co., according to the person
familiar with the matter, who wasn’t authorized to speak
publicly and asked not to be named.

The department previously said it learned that several
insurers issued coverage that applied to trades made with Iran
and cited as an example a claim submitted over a shipment of
metal products from an Iranian entity to a European company.

The regulator asked insurers for copies of compliance
policies and procedures and to identify any instance in which
they invoked a sanctions clause to refuse payment of a claim.
It’s also seeking every policy issued to Glencore Xstrata Plc or
Trafigura, according to the letter. Those companies have been
linked to a pattern of trades with Iran, the department said,
citing “recent news reports.”